In an era of rapid consumption transformation, where the marketplace is evolving at an unprecedented pace, the latest insights from Liu Peng, former Vice President of Alibaba and founder of Fenzi Youling, at the 2024 New Consumption Power Conference highlight the nuances and dynamics that govern consumer behavior in today's environment. He pointedly remarked that businesses must align their strategies with the habits and preferences of younger consumers and always aim to address women’s needs. These two principles seem to be shaping the Chinese market, suggesting that the future of retail is not just about selling products, but understanding the intricate web of consumer desires.

The theme of stratification within the Chinese consumption market has garnered considerable attention during this forum, which attracted a plethora of distinguished new consumption companies and venture capital institutions. The consensus among attendees revolves around the maturation of the market, where the demand for niche consumer goods is burgeoning, thus creating fertile ground for innovation and enterprise growth. The integration of advanced technology, especially digital and AI, appears to be the linchpin for brands looking to enhance efficiency and localize their offerings on a global scale.

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As we delve deeper into the landscape of consumer behavior, a striking observation arises: the transition from an incremental to a stagnant market is palpable. In 2024, terms such as "involution" and "low pricing" have become unavoidable within China's consumer discourse. Wan Xiao, a partner at Qicheng Capital, emphasized this shift, highlighting that consumers have increasingly found their voices as power has shifted towards them. In a market boasting over a billion people, he articulated the challenge for businesses to discern those who are willing to spend money versus those who seek to save. The goal should be to find a balance that caters to both ends of the spectrum—those who spend freely and those who are cost-conscious.

Moreover, Liu Peng’s assertion regarding the inherently stratified nature of the Chinese market is reinforced by regional and demographic variances. These divisions produce ample opportunities for various products and symbolize a rich tapestry of consumer needs. A pertinent example can be observed in brands like Miniso, which has astutely tapped into youthful consumer psychology. Originally known for its budget-friendly household goods, Miniso has metamorphosed into a global phenomenon by harnessing collaborations with popular intellectual properties (IPs). Since its public listing in July 2022, the company has consistently achieved revenue records, with over 7,000 stores worldwide by mid-2024.

From Liu Xiaobin, the CMO of Miniso, we learn that a major paradigm shift in the consumption habits of young people has taken hold. The focus has transitioned from mere functionality of products to a compelling emotional connection. This evolution opens doors to new priority premises — the emphasis now lies on aesthetics and enjoyment, suggesting that how a product makes the consumer feel is just as important, if not more so, than its practical benefits.

Focusing on female consumers, who are responsible for a sizable transformation in the health and beauty space, Fenzi Youling's approach underscores the importance of recognizing health consciousness as a fundamental aspect of consumer demand. By integrating synthetic biology techniques into its offerings, this brand is revolutionizing health and beauty through advanced formulas, positioning itself for success in a highly competitive arena. Liu Peng’s mention of the high-end oral anti-aging brand Beiyangle exemplifies the potential for cross-disciplinary innovation that meets modern consumer expectations.

Technology stands as the backbone for efficiency and cost reduction in today’s retail landscape. In just two years, Kudi Coffee has scaled its operations to over 10,000 stores, establishing itself as the fourth-largest coffee chain globally. Lee Yingbo, Chief Strategist at Kudi Coffee, attributes this rapid growth to their use of digital platforms that automate scheduling, ordering, food safety monitoring, and financial analysis, emphasizing a transformative shift from labor-dependent models to automated processes.

The impact of digitalization reaches far beyond mere operational efficiency; it facilitates smarter marketing strategies as well. Lin Minghui, Vice President of Alibaba Cloud Intelligence, articulated that companies must foster their own digital marketing capabilities to navigate complex consumer landscapes successfully. He noted that promotions received via mobile devices are not merely impulsive but should stem from a dynamic model that squares up consumer desires with smart delivery systems, significantly optimizing brands' ad spend.

Another success story is Dayao Beverage, which, at the age of 41, transitioned from a regional brand to a well-known national entity by embracing digital solutions that ensured cost control and streamlined operations. Liu Hui of Dayao Beverage pointed out that digital transformation involves translating experience and knowledge into digital formats to maintain quality and consistency. Their approach includes three focal points: ensuring stable product formulations through digitization, implementing traceable inventory systems to mitigate distributor discrepancies, and applying AI to analyze consumer feedback, thereby fueling product innovation.

The global stage beckons, and as businesses increasingly adopt the mindset that "if you’re not going global, you’re going home," companies are stepping up to challenge international norms. Shenying from Peak Capital observed that the landscape of outbound Chinese enterprises is evolving, with mature firms progressively seeking international expansion. Initially relying on e-commerce, these companies are now shifting toward establishing physical stores abroad, necessitating a strong emphasis on localization.

Localization is more than a buzzword; Meng Yong, Vice President of Shengao Group, provided striking insights into the cultural hurdles faced when setting up operations in Mexico. He illustrated the stark contrast in work ethics, where local employees might resist weekend work, leading to staffing challenges on Mondays. This cultural disconnect emphasizes the importance of understanding local customs; overcoming these challenges is integral to successful international operations.

Shenying highlighted that while many companies initially venture abroad online, the next logical step is forming localized teams and operations. The strength of localization serves as a critical test for any company’s resilience in foreign markets. Additionally, the emphasis on human resources cannot be underestimated, as organizations like PingPong recognize that building trust in new markets requires patience and meaningful partnerships across various sectors, including market research and legal domains.

In conclusion, the intricate dynamics of the Chinese consumption market are multifaceted, characterized by an ongoing evolution influenced by demographic shifts, technological advancements, and globalization. The principles set forth during the 2024 consumption conference not only serve as a barometer for understanding contemporary consumer behavior but also shape the strategies businesses must adopt to thrive in an increasingly complex marketplace. In an ever-digital world, those who remain adaptable and aware of the shifting tides of consumer desires will pave the road for success.